Instead of paying the 50p top tax rate they can, with careful financial planning, get away with a lower corporation tax rate. Someone with a personal services company would be liable to corporation tax of 20 per cent on profits of up to £300,000 in a tax year. Above this, profits are taxed at up to 24 per cent.

Fears: Ministers say the practice of allowing officials to be paid through a personal company has become widespread

To the incredulity of the committee, Miss Patel denied that the BBC was trying to reduce its tax bill through the arrangements.

‘I emphasise that none of this is
designed to avoid tax. That is not why we use an extensive number of
freelance contracts at the BBC,’ she insisted.

Miss Patel did agree to a demand from
MPs to review the way it employs its workers, however, and admitted
that there seemed to be serious concerns.

HM Revenue & Customs said it will step up investigations into the use of service companies to cut down tax bills.

£3million man!Jeremy Clarkson is BBC’s biggest earner

In the money: Clarkson in the Top Gear studio

Jeremy Clarkson earned more than £3million from his role on Top Gear last year, it emerged yesterday.

His income from the motoring show shot up by almost £1million – making him the corporation’s highest earner.

Dividends paid out by the company he co-owns with the BBC’s commercial arm, BBC Worldwide, jumped from £6million to £9million.

His bonanza emerged as the BBC revealed figures that show up to six performers are on £1million-plus deals.

Clarkson, 52, is technically not among them as most of his pay does not come from the licence fee but from the commercial deal.

His dividends are thought to net him £2.7million and, in the past, the company has awarded him a ‘services’ fee of £350,000. On top of this, he receives a BBC talent fee of around £500,000, pushing his potential income to £3.5million.

His nearest rivals are Match of the Day host Gary Lineker, on around £2million a year, and chatshow presenter Graham Norton, on more than £1.5million.

The BBC’s annual report yesterday showed that 16 stars earn £500,000 or more, down from 19 in 2010/2011. That is down from around £21million the year before.

The
BBC does not disclose individual salaries despite calls for it to do
so, but instead details the number of individuals in separate bands of
£500,000 to £750,000, £750,000 to £1million and from £1million to £5million.

Others thought to be near the top are Chris Evans and Alan Hansen. But payments to stars earning £1million or more had dropped from £14.7million to £9.7million.

Between three and six stars are understood to have received the seven-figure amounts. Last year it was between seven and nine. Jeremy Paxman, Anne Robinson and Evans may have slipped out of the top pay band.

The overall ‘talent’ bill was shown to have dropped from £212million to £203million. Director general Mark Thompson’s pay dropped from £779,000 to £622,000. His successor George Entwistle will earn £450,000. The Clarkson payout emerged in BBC Worldwide’s annual report.

A source close to Clarkson defended his BBC pay, saying: ‘He works incredibly hard and makes an incredible amount of money for BBC Worldwide. Top Gear is what it is because of Jeremy.’

The Public Accounts Committee heard evidence about the use of personal service companies (PSC) by
employees at the corporation who are not on the official staff payroll.

In the past it has been reported that
household names including Newsnight presenters Jeremy Paxman, Emily
Maitlis and Gavin Esler as well as BBC News stars Sophie Raworth and
Fiona Bruce have set up companies to channel their earnings, because
they are on freelance contracts.

The BBC has admitted before that it pays ‘up
to 3,000’ actors, editors, make-up artists and other ‘craft staff’
through service companies. Of these, 36 earn more than £100,000.

A total of 318 people earning more
than £50,000 were also shown as having not paid tax at source, according
to the statistics, obtained following a freedom of information request
by Conservative MP David Mowat.

Zarin Patel said the arrangement lets staff who are ‘off payroll’ to carry
out work elsewhere.

She told BBC Radio 5Live's Stephen
Nolan programme: ‘What we are trying to do is balance the needs of the
industry in moving around and being flexible with our obligation to
ensure that the right amount of tax is paid by these individuals.

‘The use of personal service
companies is a clean and clear way for those people to be able to
contract with different broadcasters if they wish to do so.’

She added: ‘By using the service
company framework we ensure that HMRC has every chance to look at
whether the appropriate amount of tax is being paid.’

Howard Orme, finance director of the
department of business, innovation and skills, Carolyn Downs from the
Local Government Association and Anthony Fry from the BBC Trust are all
due to give evidence to the Commons committee.